the advantage of owning is you "lock in" your rent in the year that you purchase. your "rent" rate never goes up unless you re-fi, etc... that is the big advantage is that in year 20 or year 30 or year 40 you are paying (or not paying if house is paid for) below market rents by a substantial margin based on housing prices from the time you purchased.

I haven’t gone through all of the other replies, so forgive me if this is redundant.

To me, owning is about that moment when your mortgage, taxes, and insurance combined is less than renting a place, knowing you’ve hedged against those inevitably rising costs. More so, it’s about the peace of mind of never having another payment for a place to live, particularly if you’ve been able to be responsible and get the mortgage killed early. We’re in a position to be semi-frugal but still have fun and have a house free and clear with 20 strong working years left. That’s a huge retirement peace of mind, a big comfort if something happens, putting us in position to exceed retirement goals and help the kids more with higher education & giving is freedom to travel more while we’re young enough to enjoy it.

Others may talk about tax breaks, pride of ownership, doing what you want with their own place, etc, all well and good, but all entirely secondary in my opinion to never having a payment again.

If you invested $70K in Walmart in 1960s, I think you would have a lot more than $1.2 million now. When you do this proper comparison, the housing gain is not that impressive.
You have to compare house appreciation to what appreciation you would see in other assets over the same time period (minus all the headaches and labor of property ownership).

Although some people get lucky and buy at the right time and see outsized appreciation, by-and-large real estate is not a "better than average" investment. If you really think it is, just invest in an REIT, same market exposure, way less hassle. Right now, with rates very low (I have a 3%, 15 year mortgage and I put 20%), I am paying way below "market" rent when I look at how much of my monthly payment (includes taxes and insurance) is going to principle (about 70%), so as long as the real estate market stays stable this is a good deal. However it is not as great as it looks when I could have made 15% in an S&P 500 Index fund this year on the capital I have tied up in housing equity.

As has already been said, the main advantage of owning is piece of mind (nobody can make you move) and not having to deal with a prick of landlord. I bought a house about three years ago, largely based on my property manager was a douchebag and I got tired of his antics. The lawn was all weeds and the landlord complained to me about it, indicated I should water and fertilize it, afraid not.

If you live in eminent domain, you will be made to move.

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DISH is how we do it.

If you invested $70K in Walmart in the 1960's like real estate, you could have done it with only $14K and a 30-year deductible loan (20% down). The ability to massively leverage home investment is the biggest strength and weakness of real estate. It can go up OR down, but 7% appreciation for 15 years has been equivalent to 30% return on investment. That would be a better comparison. Real estate returns can be hugely positive or negative or negligible.

Based on the OP, owning a home outright means no mortgage payment. That alone reduces monthly outlays greatly. With few exceptions real estate appreciation has far outpaced inflation. Maybe it's possible to get a better return elsewhere, but there's typically more exposure to risk.

Owning a home may not be the best choice for everyone. If you're a person who may not stay put for a long time maybe renting would be better.

For me, it was part of our long term plan. By the time we retire within the next five years we will be mortgage free and have no other debts either. All renovations will have been completed and fully paid for. We won't be going into retirement faced with paying a huge rent that often escalates faster than inflation.

Owning means we are free to do what we want in our home as far as decorating, and how we want to utilize the rest of our property (within zoning laws).

We have a 3000 sq ft house. To rent something this size in my area would be well more than double our mortgage. Our property has appreciated substantially and given the shortage of homes for sale in my area it may even rise faster in the next few years.

For us there was no question owning was by far the better choice.

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Don

Tri-ing to have fun. Anything else is just a bonus!

I ran an insurance claim in Nebraska for a rental home. The tenants had been there for 19 years. I can't imagine paying rent on a house for that long.

The people in the house behind ours on the next street have been renting for at least 12 years. The house and property look like a rental too. The house has received no real maintenance, the yard is just weeds, and the owners live out of state and couldn't care less. The fence between our properties was falling down and we replaced it on our dime since the owners are completely uninterested in fixing anything.

Probably a good deal for both the owners and renters. The renters are probably paying below market rent since they've been there so long and the owners are pocketing everything and doing nothing to increase the property value. It's okay as long as the renters are fine with living in a steadily deteriorating property.

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Don

Tri-ing to have fun. Anything else is just a bonus!

Your description of your neighbor's house fits this house perfectly. I get the impression that the landlord is giving them a good deal, but the house is deteriorating. I guess it works out or both parties.

How on Earth is that comparison proper.

First, unless you buy that house for cash in the 1960's, you can't compare dumping 70k into a one in a thousand stock pick all at once. Run the numbers by investing 7000, then the difference of housing cost minus rent over the next 25 years instead.

Second, replace Walmart with the Dow or something, not an outlier of a stock pick.

Your comparison is like saying "hey, if you dumped all your savings in to Microsoft instead of a down payment in the 80's you would get a much better return then spending that on home ownership".

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Long Chile was a silly place.

Your kinda asking the wrong question.

Buying a house is an investment. Where is your money best parked? Real estate? Stock market?

Next issue is, how long do you plan on staying and do you want to do whatever you want with the property? Renting, your pretty limited.

Owning, you have maintenance costs, real estate fees when you move, appreciation or depreciation expense. Not everyone makes money on their home. It’s a risk. Lastly, you tie up cash needed as a down payment to move in.

For me, I speculate on appreciation, this I own. I also know quite a bit about construction, thus I do my own repairs and remodal work. It keeps costs down when owning.

I don't see my house as an investment per se, it's first and foremost a home. Ideally property would stay around the same value, allowing for inflation. That way I can upsize or downsize in the future without too much pain, and my kids will also be able to get on the property ladder. If my property doubles in value I get no appreciable benefit from it unless I downsize or move to a cheaper area. If I owned multiple properties, that would be an investment.

The reason I prefer to own my home rather than renting it? Firstly because property prices don't tend to stay flat, so owning our home is a good hedge against prices going up. Secondly we like where we live and plan on staying there a long time, so don't want to be at the whim of a landlord. And lastly I like the stability and security of owning our home. We look after it better, make improvements that we wouldn't bother with as tenants, things are done to our taste not a landlord's, and when we spend money on it we will pay for quality work and fittings that are going to last a long time.

If I wasn't sure how long I would be staying in an area then points 2 and 3 don't really apply. And in the OP's case he already owns investment properties as well so the first point doesn't really apply either.

something worth pointing out that you probably know but has not been said by anyone:

Land is the investment. Almost everything else depreciates. If I was forced to live in some suburb like the Woodlands Texas I would at least consider renting.

I agree with almost everything in here on both sides.

Having investment real estate meets the hedge requirement on rental increases negating the need to live in it myself as an example.

The costs of buying in are high and the costs of exiting are high, so i suspect that if, as alluded to earlier in the thread you know you will be somewhere less than, perhaps 5 years, it's not worth buying.

Owning a home is a safety investment. At least over the long term. When you have safety investments you have an increased comfort in investing in other more risky things. I own my home outright but it was getting to be a smaller proportion of my net worth so I bought land. The land has no upkeep costs to speak of because it has no buildings.

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They constantly try to escape from the darkness outside and within
Dreaming of systems so perfect that no one will need to be good T.S. Eliot

 
Definitely two sides to the argument and it really depends on the person, the market, and the timing.

I was born and raised 15 miles from where I live currently. I am also the 4th generation to run a family business in the same area, needless to say my roots are pretty deep in the area. My wife and I discussed moving away when we first got married, we couldn't settle on a place that was better than where we are so we decided to stay. So that takes care of the person, we don't plan to go elsewhere.

For us timing was everything. I have friends that are a bit older and got married a bit younger. I watched them pay $260k for a 3 bed 2 bath 1,500sq ft house in 2005-2006. 3 years later that house was worth $120k. They are back to where they started now, but suffice to say, the timing was poor. We were very lucky, got married in 2009 and bought our house in 2010 at the ages of 25 and 23. The market was still at the bottom in our area with plenty of foreclosures and short sales to be had. Our house was built in 2007 and original purchase price was $450k. We got it in 2010 for $205k. 7 years later we are in the $350-375k range. Now of course that "gain" can only be realized if we were to sell it, which we are not planning on doing, so I don't really see it as a gain. For us the benefit to buying was we got a 3,000sq ft house with very custom features, on a golf course, in one of the best neighborhoods around for a price a 25 and 23 year old could afford. I couldn't come close to affording my house if I was to buy now, it is a great feeling to know that I will have my house paid off well before retirement and will never have a need/desire to upgrade so I won't be one of these 50-60 year old guys borrowing a couple hundred thousand to buy a nicer house right before retirement.

So all comes down to person and timing. If I had been earlier in the game, looking at $260k for a house that was worth $120k, I would continue to rent until the market adjusted. Lucky for me the timing was good. Market may adjust again here, but over the 40-50 years I plan to own this house, I think I'll do alright in the long run.

YES. Former homeowner of 11 years, where I lost a significant amount of money due to repairs, renovations and from buying at a bad time (2006).

This summer, I moved across the country and decided to rent for the first year while I decided where I wanted to be permanently. It's the best thing I've ever done. My landlord is kick-ass, she renovated the whole place just prior to me moving in (so my place has all new flooring, kitchen, 2.5 bathrooms, light fixtures, etc.), is incredibly responsive, has things fixed next-day, offers preventive stuff like chimney sweep for the winter, that kind of thing. I know that I pay for the HOA dues within my rent, but not having to lift a finger for yard work or maintenance GIVES ME LIFE as a 30-something single gal. Until my life situation dramatically changes, I will likely rent for many more years to come.

I rented in SF for 19 years. Pretty typical there.


This is why I bought 3.5 years ago in Nashville - my MTI for 3,100 sq ft is less than a 750 sq ft apt. in the urban core. And, my townhouse has more than doubled in price. If it goes down, oh well - I still have a 3,100 sq ft great place to live.

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clm
Nashville, TN
https://twitter.com/ironclm | http://ironclm.typepad.com

That "gain" is also equity that you can borrow against if you need to . . . something you can't do with an apartment. So, if you want to do some repairs/remodeling, or take an expensive vacation you can't afford to pay cash for, pay for huge unforeseen medical costs, or lend money to your kid for college, you can take out a loan/line of credit that is (at least presently) tax deductible and often loaned at a lower interest rate. Can't do that in an apartment you don't own. There's certainly a risk to using the equity in your home as something to borrow against, but I like knowing I have it . . . of course, if the value of your property goes down rather than up, you may not have that equity to use, but for many people, particularly here in the Denver area, it's a valuable thing to have.

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''The enemy isn't conservatism. The enemy isn't liberalism. The enemy is bulls**t.''

—Lars-Erik Nelson

Although some people get lucky and buy at the right time and see outsized appreciation, by-and-large real estate is not a "better than average" investment.

You want to talk about luck? Try picking single stock today in which you should invest $70K and feel confident it will be worth $1.2mm 50 years later. Also just by virtue of inflation that $70K would be worth ~$600K over that time period.